Some biotech stocks follow the old maxim that "what goes up will come down." Others, though, adhere to a more upbeat principle: winners win.
We asked three Motley Fool contributors to pick biotech stocks that have soared in 2021 and could go even higher in 2022. Here's why they chose BioNTech (BNTX -0.03%), Eli Lilly (LLY -0.40%), and Novavax (NVAX -1.32%).
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Think long term
Prosper Junior Bakiny (BioNTech): BioNTech partnered with Pfizer (PFE 0.65%) to develop the leading coronavirus vaccine on the market, Comirnaty. BioNTech is reaping the benefits of this arrangement. During the third quarter, it recorded 6.1 billion euros in revenue (roughly $6.8 billion). The company also recorded a profit of 3.2 billion euros ($3.6 billion). During the third quarter of 2020, BioNTech reported revenue of 67.5 million euros and a net loss of 210 million euros.
Thanks to its coronavirus-related efforts, BioNTech's stock has soared by nearly 250% since the beginning of the year. And the best news is that the windfall it is currently experiencing as a result of Comirnaty is far from over.
First, booster doses of Comirnaty are now approved in the U.S. The booster market could provide another lift to BioNTech and Pfizer. Second, with new variants of the virus that causes COVID-19 still popping up, it looks increasingly likely that this disease is here to stay, just as Pfizer's CEO Albert Bourla predicted.
Meanwhile, BioNTech can take advantage of its current pile of cash to advance its pipeline candidates. The company boasts more than 20 programs, many of which are going after several forms of cancer and infectious diseases.
In November, BioNTech announced that the FDA had granted fast track designation to BNT111, a potential therapy for melanoma. This designation helps speed up the review process for promising treatments that address an unmet need. BNT111 is currently undergoing a phase 2 clinical trial that kicked off in June. BioNTech is running three other phase 2 studies, and data readouts will likely come in within the next nine months.
Positive results from these ongoing trials will positively impact BioNTech's stock. In the long run, I expect BioNTech to leverage its expertise in mRNA therapies, coupled with the cash it is generating thanks to Comirnaty, to land exciting candidates and, eventually, a solid lineup of products. That's why this biotech stock could continue on its upward trajectory in 2022 and beyond.
Eli Lilly's stock could just be warming up
David Jagielski (Eli Lilly): One stock that's been a great holding in 2021 is Eli Lilly. Investing in the drugmaker this year would have generated returns of more than 65% thus far for your portfolio, well above the S&P 500's gains of around 25%.
But that should come as no surprise, as Eli Lilly's business has been performing well this year. In its most recent quarter, the company's top line came in at $6.8 billion, up 18% year over year. Even when factoring out the boost in sales from its COVID-19 therapies, sales were still up 11% from the prior-year period. And with hospitals and doctor's offices still not back to pre-pandemic operations, there could continue to be strong growth next year as things (hopefully) return to normal.
Although the company expects "minimal revenue" from its COVID-19 therapies next year, investors shouldn't rule out higher sales. In December, the U.S. Food and Drug Administration (FDA) expanded the Emergency Use Authorization for bamlanivimab and etesevimab to treat certain high-risk pediatric patients under the age of 12 with mild to moderate COVID-19.
Much of the bullishness surrounding the stock next year could be from drugs that might not even generate meaningful (if any) revenue in 2022. In October, the company initiated a rolling submission of its Alzheimer's drug, donanemab. The FDA could make a decision on the treatment by the latter half of next year.
Earlier this year, shares of Biogen soared more than 38% on the day investors learned that the FDA granted accelerated approval for the company's Alzheimer's drug, Aduhelm. Eli Lilly is going to have a trial that compares its drug against Aduhelm. Favorable results there could also drive a lot of excitement behind its shares.
In addition, Eli Lilly has submitted a New Drug Application for its type 2 diabetes drug tirzepatide. The company used a priority review voucher, which could lead to an FDA review taking place sometime next year.
Between the potential for continued growth next year and some exciting drug reviews taking place in the near future, there are plenty of catalysts that could propel Elli Lilly's stock to new heights in 2022.
COVID-19 catalysts coming
Keith Speights (Novavax): BioNTech isn't the only vaccine stock that delivered great returns in 2021. Novavax's shares soared 74% even after giving up a big chunk of its gains after the company delayed its regulatory filings for COVID-19 vaccine NVX-CoV2373.
But those delays are in the past. Novavax now has multiple potential COVID-19 catalysts coming in 2022 (and perhaps even sooner, in some cases.)
The company expects to file for U.S. Emergency Use Authorization (EUA) of NVX-CoV2373 by the end of this month. I suspect this regulatory submission will send Novavax's shares flying higher. My prediction is that the FDA will give EUA to Novavax's vaccine sometime in the first quarter of 2022.
Novavax also awaits regulatory decisions across the world. Arguably the most important of these is in the European Union. If NVX-CoV2373 wins EU authorization, Novavax will supply at least 100 million doses of the vaccine and potentially up to 200 million doses. Outside of the EU, authorization decisions should be on the way in Australia, Canada, India, Japan, New Zealand, Singapore, South Korea, the United Arab Emirates, and the U.K., plus a potential Emergency Use Listing with the World Health Organization.
I look for Novavax to achieve progress with its development of a combination COVID-19/flu vaccine next year as well. The company has previously reported positive late-stage results for its flu vaccine candidate NanoFlu. A NVX-CoV2373/NanoFlu combo could be a big winner if COVID-19 becomes endemic.
The average Wall Street price target for Novavax stock reflects an upside potential of more than 30% over the next 12 months. I think that shares could jump nearly that much by early next year. And if Novavax wins additional supply deals, this stock just might deliver even bigger gains in 2022 than it has in 2021.
